Regulation of refund anticipation payment instruments and tax return preparers

(a)

In general

Subtitle B of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended by adding at the end the following new section:

1029B.

Regulation of refund anticipation payment arrangements and tax return preparers

(a)

In general

The Bureau shall— (1)regulate refund anticipation payment arrangements; (2)establish a program to license or certify tax return preparers subject to this section; (3)regulate such tax return preparers; and (4)before licensing or certifying a person as a tax return preparer subject to this section, require that the person demonstrate— (A)good character; (B)good reputation; (C)necessary qualifications to enable the person to provide to persons valuable service as a tax return preparer; and (D)competency to perform the functions of a tax return preparer. (b)

Authority To impose a fee

The Bureau shall require tax return preparers subject to this section to pay a reasonable fee for licensing or certification under this section. (c)

Disclosure requirements

The Bureau shall, by rule, require tax return preparers subject to this section to provide a disclosure statement to a consumer that shall contain statements— (1)identifying the amount of fees such tax return preparer charges for preparing a Federal income tax return, filing a Federal income tax return, or executing a refund anticipation payment arrangement; (2)identifying the average amount of time in which an individual who files a Federal income tax return electronically can expect to receive a refund by mail, according to information provided by the Internal Revenue Service; (3)describing, in the case of a refund anticipation payment arrangement involving a depository account not controlled by the consumer, the difference in days between the average amount of time by which a consumer receives the tax refund (in whole or in part) from a refund anticipation payment arrangement and the average amount of time by which a consumer who files a Federal income tax return electronically receives the tax refund deposited directly to that consumer’s deposit account by the taxing authority; (4)that a refund anticipation payment arrangement is not necessary to receive a tax refund; and (5)that, if a consumer does not receive a tax refund or the amount of the tax refund is less than the amount anticipated under the refund anticipation payment arrangement, the consumer may be responsible for paying any fees and interest associated with a refund anticipation payment arrangement. (d)

Requirements under TILA

The Bureau shall issue regulations that, to the extent practicable, require tax return preparers that enter into a refund anticipation payment arrangement to comply with section 128 of the Truth in Lending Act (15 U.S.C. 1638) to the same extent as a creditor making a consumer credit transaction other than under an open end credit plan. (e)

Disciplinary procedures

After notice and opportunity for a hearing, the Bureau may take any enforcement action against a tax return preparer subject to this section who— (1)is incompetent; (2)is disreputable; (3)violates regulations prescribed under this section; or (4)with intent to defraud, willfully and knowingly misleads or threatens a consumer. (f)

Definitions

For purposes of this section, the following definitions shall apply: (1)

Tax return preparer

The term tax return preparer subject to this section means a tax return preparer (as defined in section 7701(a)(36) of the Internal Revenue Code of 1986) who is not subject to regulation under section 330 of title 31, United States Code. (2)

Refund anticipation payment arrangement

The term refund anticipation payment arrangement means an arrangement under which, in exchange for Federal income tax preparation services, a consumer agrees to pay a fee or interest upon receipt of the consumer’s tax refund to a tax return preparer, lender, or other affiliated lender by— (A)requesting the Federal Government to deposit such tax refund, in whole or in part, directly into a depository account designated by either the consumer or the tax return preparer, lender, or other affiliated lender; or (B)directly paying the fee or interest to the tax return preparer, lender, or other affiliated lender.

(b)

Clerical amendment

The table of contents of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5301 et seq.) is amended by inserting after the item related to section 1029A the following new item:

Sec. 1029B. Regulation of refund anticipation payment arrangements and tax return preparers.

(c)

Exclusion for certain tax preparers

(1)

In general

Section 1027(d)(1) of such Act is amended by striking subparagraph (B). (2)

Conforming amendments

Section 1027(d) of such Act is further amended— (A)in paragraph (1)— (i)in the heading, by striking

and tax preparers

; (ii)by striking subparagraph (B); (iii)by striking authority over and all that follows through any person and inserting authority over any person; (iv)by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively, and by moving such subparagraphs 2 ems to the left; (v)by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively, and by moving such clauses 2 ems to the left; (vi)in subparagraph (A) (as redesignated), by inserting (except as related to tax return preparers pursuant to section 1029B) after tax; and (vii)in clause (ii) (as redesignated), by striking ; or and inserting a period; and (B)in paragraph (2)— (i)in subparagraph (A)— (I)by striking paragraph (1)(A) or (1)(B) and inserting such paragraph; and (II)by striking paragraph (1)(A) each place it appears and inserting paragraph (1); (ii)in subparagraph (C)— (I)by striking For purposes of subparagraphs (A) and (B), a person described in paragraph (1)(A) and inserting A person described in paragraph (1); and (II)by striking clause (i) or (ii) of paragraph (1)(A) and inserting subparagraph (A) or (B) of paragraph (1); and (iii)in subparagraph (D), by striking described in paragraph (1)(A) or (1)(B).